A key takeaway from the Bank of Canada’s interest rate statement Wednesday is that the central bank is a little less worried about low inflation. But not so much that it’s ready to do an about-face and go hawkish again.

Cautioning that inflation is expected to remain well below the 2% target for some time, Canada’s central bank said “downside risks to inflation remain important.” On its own, that sounds as dovish as a central bank with an official inflation-targeting mandate could. But, the tone was even more dovish in January when the central bank said “downside risks to inflation have grown in importance.” That language prompted chatter of potential rate cuts, and Bank of Canada Governor Stephen Poloz himself admitted at the time that he had cracked the door open slightly to rate cuts.

Mr. Poloz isn’t alone in fretting about low inflation. Central banks in the U.S., the European Union and other developed nations have also been worrying about slowing inflation, despite ultra-low rates and years of easy money policies. A recent pickup in prices in the U.S. and Canada should help allay such concerns. Read More »

It should come as no surprise Friday when Canadian inflation data for December comes in below the 2% target level for a 20th straight month. Bank of Canada Governor Stephen Poloz let the cat out of the bag earlier this week.

Inflation in Canada remains uncomfortably low in the central bank’s view, with Mr. Poloz saying this week that headline and core CPI are expected to be lower than previously anticipated. The central bank’s forecast suggests inflation is set to “remain around” 1% in the first half of 2014, and won’t reach the preferred 2% target for about two years, or early 2016.

Nevertheless, traders expect Statistics Canada will report inflation surged in December to a five-month high.

The consensus among private-sector economists heading into Friday’s CPI release indicate Canada’s annual inflation rate rose in December to 1.3%, from the 0.9% increase the previous month, mostly on higher energy prices. Economists at BMO Capital Markets said the December report will likely to be skewed by year-ago effects, as prices in December, 2012 recorded a steep plummet. Read More »

The official launch of Canada’s newest polymer banknotes Thursday will mark a few firsts for the country’s central bank, including a two-city launch to be presided over by Bank of Canada Governor Stephen Poloz and his senior deputy.

Some say the unusual cross-country launch is another sign that the country’s top central banker isn’t averse to sharing the spotlight with colleagues.

The notes are the country’s first five and 10-Canadian-dollar polymer bills. And the fives will be the first Canadian banknotes to bear Mr. Poloz’s signature. He became central bank chief in June and this will be the first currency launch under his watch.

Sharing the honors with the bank’s number two official, Tiff Macklem, is an unusual move. Mr. Poloz is presiding at the launch of the five-dollar bills at the Canadian Space Agency in Saint Hubert, Quebec, where he’ll be joined by retired Canadian astronaut Chris Hadfield. The design on the note depicts Canada’s contribution to the international space program, including the robotic arm used to build and maintain the International Space Station. Back in April, Mr. Hadfield who was then commanding the ISS, joined Canadian Finance Minister Jim Flaherty and then-governor Mark Carney by video link to unveil the new note.Read More »

That may be one of the most important things Canadians have learned about their new central bank governor since he took on the job in July.

What it means is that Mr. Poloz doesn’t believe there’s a particular number, such as the unemployment rate, that he and his colleagues at the Bank of Canada should target when they set interest rates.

To be sure, there is one piece of data the bank is always targeting. Its fundamental goal is to keep inflation near or at its 2% target over the medium term.

But when it comes to using other specific data points as temporary objectives in achieving that ultimate policy goal, Mr. Poloz isn’t interested, as he indicated at a news conference on Wednesday. Read More »

It’s not easy stepping out of the shadow of a predecessor who’s been dubbed a “rock star” central banker. But new Bank of Canada Governor Stephen Poloz is doing just that, albeit in his own, quiet way.

In the four short months since he succeeded Mark Carney, Mr. Poloz has put his stamp on the forward guidance in the two rate decisions over which he has presided, introduced a more folksy tone to his public speeches, and on Tuesday, allowed his number 2, Tiff Macklem, to give advance notice of a downgrade to growth forecasts — an unusual occurrence at the Bank.

“Rarely do you see a Bank of Canada announcing via a deputy governor that they’re tweaking their forecast,” said Stefane Marion, chief economist and strategist at National Bank of Canada in Montreal.

Traditionally, the Bank has rigidly maintained official forecasts in between its quarterly monetary policy reports, and any hints of a change usually came only from the governor.

“Mr. Poloz seems to be comfortable to allow deputies who have extreme credibility with markets,” to deliver the message, Mr. Marion said, adding that he welcomes “this improved transparency, where we don’t have to second-guess,” what the central bankers are thinking. Read More »

If Bank of Canada Governor Stephen Poloz went out on a limb with his optimistic take on the economy last week, some of the country’s executives seem happy to join him there.

Mr. Poloz’s view that the Canadian economy is near the tipping point from improving confidence to natural growth — expressed in a speech in Vancouver last Wednesday — elicited skepticism from some economists.

But an increasing number of accountants in executive positions at Canadian companies are optimistic about the economy’s direction in the next 12 months, according to a quarterly survey conducted by CPA Canada, the umbrella group for chartered professional accountants. Read More »

New Bank of Canada Governor Stephen Poloz has to decide how aggressive he wants to be — if at all — in his first policy decision next week.

Mr. Poloz will be guided by the bank’s outlook on growth and inflation in the quarterly Monetary Policy Report, which will be published together with the rate statement on July 17.

So what can we expect from Mr. Poloz?

He may drop the rate hike signal that’s made Canada’s central bank an exception among Group of Seven nations, or he could provide more explicit forward guidance. Such a move would be a sure sign he wants to make his own mark and step out of the shadow of his famous predecessor Mark Carney, who now heads the Bank of England. Read More »

About Canada Real Time

Canada Real Time provides insight and analysis into what’s making news in Canada, a country punching above its weight on the world stage thanks to its vast resources and strong banking sector. Drawing on the expertise of The Wall Street Journal and Dow Jones Newswires, we take a look at developments in fields ranging from business to politics to culture. You can contact the editors at canadaeditors@dowjones.com